[Federal Register Volume 81, Number 108 (Monday, June 6, 2016)]
[Notices]
[Pages 36346-36350]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-13185]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States of America v. BBA Aviation plc, et al.; Public
Comment and Response on Proposed Final Judgment
Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C.
16(b)-(h), the United States hereby publishes below the comment
received on the proposed Final Judgment in United States of America v.
BBA Aviation plc, et al., Civil Action No. 1:16-cv-00174, together with
the Response of the United States to Public Comment.
Copies of the comment and the United States' Response are available
for inspection on the Antitrust Division's Web site at http://www.justice.gov/atr, and at the Office of the Clerk of the United
States District Court for the District of Columbia. Copies of these
materials may be obtained from the Antitrust Division upon request and
payment of the copying fee set by Department of Justice regulations.
Patricia A. Brink,
Director of Civil Enforcement.
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
United States Of America, Plaintiff, v. BBA Aviation PLC,
Landmark U.S. Corp LLC, and LM U.S. Member LLC, Defendants.
Case: 1:16-cv-00174
Judge: Amy Berman Jackson
RESPONSE OF PLAINTIFF UNITED STATES TO PUBLIC COMMENT ON THE PROPOSED
FINAL JUDGMENT
Pursuant to Sections 2(b)-(h) of the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h) (``APPA'' or ``Tunney Act''),
Plaintiff, the United States of America (``United States'') hereby
files the single public comment received concerning the proposed Final
Judgment in this case and the United States's response to the comment.
After careful consideration of the submitted comment, the United States
continues to believe that the proposed Final Judgment (``PFJ'')
provides an effective and appropriate remedy for the antitrust
violations alleged in the Complaint. The United States will move the
Court for entry of the proposed Final Judgment after the public comment
and this Response have been published in the
[[Page 36347]]
Federal Register pursuant to 15 U.S.C. 16(d).
I. BACKGROUND
On February 3, 2016, the United States filed a civil antitrust
Complaint alleging that the proposed acquisition by Defendant BBA
Aviation plc (``Signature'') of Defendants Landmark U.S. Corp LLC and
LM U.S. Member LLC (``Landmark''), announced on September 23, 2015,
would be likely to substantially lessen competition in the provision of
full-service fixed-based operator (``FBO'') services at six airports in
the United States, in violation of Section 7 of the Clayton Act, 15
U.S.C. 18. The Complaint further alleged that, as a result of the
acquisition as originally proposed, prices for these services in the
United States would likely have increased and customers would have
received services of lower quality.
At the same time the Complaint was filed, the United States also
filed a Hold Separate Stipulation and Order (``Hold Separate Order'');
a Proposed Final Judgment (``PFJ''); and a Competitive Impact Statement
(``CIS'') that explains how the PFJ is designed to remedy the likely
anticompetitive effects of the proposed acquisition. As required by the
Tunney Act, the United States published the PFJ and CIS in the Federal
Register on February 10, 2016. In addition, the United States ensured
that a summary of the terms of the PFJ and CIS, together with
directions for the submission of the written comments, were published
in The Washington Post on seven different days during the period of
February 6, 2016 to February 12, 2016. See 15 U.S.C. 16)(c). The 60-day
waiting period for public comments ended on April 12, 2016. Following
expiration of that period, the United States received one comment,
which is described below and attached hereto as Exhibit 1.
II. STANDARD OF JUDICIAL REVIEW
The Tunney Act requires that proposed consent judgments in
antitrust cases brought by the United States be subject to a 60-day
public comment period, after which the court shall determine whether
entry of the proposed Final Judgment ``is in the public interest.'' 15
U.S.C. 16(e)(1). In making that determination, the court, in accordance
with the statute as amended in 2004, is required to consider:
(A) the competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration of relief sought, anticipated effects of
alternative remedies actually considered, whether its terms are
ambiguous, and any other competitive considerations bearing upon the
adequacy of such judgment that the court deems necessary to a
determination of whether the consent judgment is in the public
interest; and
(B) the impact of entry of such judgment upon competition in the
relevant market or markets, upon the public generally and
individuals alleging specific injury from the violations set forth
in the complaint including consideration of the public benefit, if
any, to be derived from a determination of the issues at trial.
15 U.S.C. 16(e)(1). In considering these statutory factors, the court's
inquiry is necessarily a limited one as the government is entitled to
``broad discretion to settle with the defendant within the reaches of
the public interest.'' United States v. Microsoft Corp., 56 F.3d 1448,
1461 (D.C. Cir. 1995); see also United States v. SBC Commc'ns, Inc.,
489 F. Supp. 2d 1, 10-11 (D.D.C. 2007) (assessing public interest
standard under the Tunney Act); United States v. InBev N.V./S.A., No.
08-cv-1965 (JR), 2009 U.S. Dist. LEXIS 84787, at *3 (D.D.C. Aug. 11,
2009) (discussing nature of review of consent judgment under the Tunney
Act; inquiry is limited to ``whether the government's determination
that the proposed remedies will cure the antitrust violations alleged
in the complaint was reasonable, and whether the mechanisms to enforce
the final judgment are clear and manageable'').
Under the APPA, a court considers, among other things, the
relationship between the remedy secured and the specific allegations
set forth in the Complaint, whether the decree is sufficiently clear,
whether the enforcement mechanisms are sufficient, and whether the
decree may positively harm third parties. See Microsoft, 56 F.3d at
1458-62. With respect to the adequacy of the relief secured by the
decree, a court may not ``engage in an unrestricted evaluation of what
relief would best serve the public.'' United States v. BNS, Inc., 858
F.2d 456, 462 (9th Cir. 1988) (citing United States v. Bechtel Corp.,
648 F.2d 660, 666 (9th Cir. 1981)). Instead, courts have held that:
[t]he balancing of competing social and political interests affected
by a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's
role in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement in ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).
In determining whether a proposed settlement is in the public
interest, ``the court `must accord deference to the government's
predictions about the efficacy of its remedies.''' United States v.
U.S. Airways Grp., Inc., 38 F. Supp. 3d 69, 76 (D.D.C. 2014) (quoting
SBC Commc'ns, 489 F. Supp. at 17). See also Microsoft, 56 F.3d at 1461
(noting that the government is entitled to deference as to its
``predictions as to the effect of the proposed remedies''); United
States v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C.
2003) (noting that the court should grant due respect to the United
States' ``prediction as to the effect of the proposed remedies, its
perception of the market structure, and its views of the nature of the
case''); United States v. Morgan Stanley, 881 F. Supp. 2d 563, 567-68
(S.D.N.Y. 2012) (explaining that the government is entitled to
deference in choice of remedies).
Courts ``may not require that the remedies perfectly match the
alleged violations.'' SBC Commc'ns, 489 F. Supp. 2d at 17. Rather, the
ultimate question is whether ``the remedies [obtained in the decree
are] so inconsonant with the allegations charged as to fall outside of
the `reaches of the public interest.''' Microsoft, 56 F.3d at 1461.
Accordingly, the United States ``need only provide a factual basis for
concluding that the settlements are reasonably adequate remedies for
the alleged harms.'' SBC Commc'ns, 489 F. Supp. 2d at 17; see also
United States v. Apple, Inc. 889 F. Supp. 2d 623, 631 (S.D.N.Y. 2012).
And, a ``proposed decree must be approved even if it falls short of the
remedy the court would impose on its own, as long as it falls within
the range of acceptability or is within the reaches of the public
interest.'' United States v. Am. Tel. & Tel. Co., 552 F. Supp. 131, 151
(D.D.C. 1982) (citations and internal quotations omitted); see also
United States v. Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky.
1985) (approving the consent decree even though the court would have
imposed a greater remedy).
In its 2004 amendments to the Tunney Act,\1\ Congress made clear
its
[[Page 36348]]
intent to preserve the practical benefits of using consent decrees in
antitrust enforcement, adding the unambiguous instruction that
``[n]othing in this section shall be construed to require the court to
conduct an evidentiary hearing or to require the court to permit anyone
to intervene.'' 15 U.S.C. 16(e)(2). The procedure for the public
interest determination is left to the discretion of the court, with the
recognition that the court's ``scope of review remains sharply
proscribed by precedent and the nature of the Tunney Act proceedings.''
SBC Commc'ns, 489 F. Supp. 2d at 11; see also United States v. Enova
Corp., 107 F. Supp. 2d 10, 17 (D.D.C. 2000) (``[T]he Tunney Act
expressly allows the court to make its public interest determination on
the basis of the competitive impact statement and response to public
comments alone.''); US Airways, 38 F. Supp. 3d at 76 (same).
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\1\ The 2004 amendments substituted ``shall'' for ``may'' in
directing relevant factors for courts to consider and amended the
list of factors to focus on competitive considerations and to
address potentially ambiguous judgment terms. Compare 15 U.S.C.
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns,
489 F. Supp. 2d at 11 (concluding that the 2004 amendments
``effected minimal changes'' to Tunney Act review).
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III. SUMMARY OF PUBLIC COMMENT AND THE UNITED STATES'S RESPONSE
The United States received one public comment from the City of
Dallas (``Dallas''). Though the comment was submitted after the
deadline for comments had passed, the United States has nevertheless
issued a full response. Dallas submitted the comment to express concern
about the possible anticompetitive effects of Signature's acquisition
of Landmark at Love Field Airport (``Love Field''), which Dallas
operates. Combined, Signature and Landmark have 54 percent of the FBO
market and lease nearly 70 percent of the FBO facilities at Love Field.
Dallas submitted the comment to provide additional information about
the situation at Love Field and highlight what Dallas believes to be
competitive concerns the PFJ does not address. In particular, Dallas is
concerned that the PFJ would not require Signature to report future FBO
acquisitions at Love Field to the United States. Dallas does not,
however, argue in favor of a divesture of FBO assets at Love Field.
The United States appreciates Dallas's advocacy efforts on behalf
of competition at Love Field. The United States carefully considered
the effects of the acquisition at Love Field and chose not to take
enforcement action against such acquisition. Over the course of a five-
month investigation, the United States reviewed party and third-party
documents, conducted economic data analysis, and talked with dozens of
industry participants including the Aviation Director for the City of
Dallas. As a result of this investigation, the United States did not
allege a violation of the Clayton Act resulting from the acquisition of
Love Field in its Complaint. Therefore, the comment submitted by Dallas
is not a comment addressing the question before the Court, which is
whether the proposed remedy will cure the antitrust violations alleged
in the Complaint. Should any future acquisitions by Signature at Love
Field raise a possibility of competitive harm, Dallas or any other
affected party may raise those concerns with the United States to be
evaluated at such future date.
IV. CONCLUSION
After reviewing the public comment, the United States continues to
believe that the PFJ, as drafted, provides an effective and appropriate
remedy for the antitrust violations alleged in the Complaint, and is
therefore in the public interest. The United States will move this
Court to enter the PFJ soon after the comment and this response are
published in the Federal Register.
Dated: May 27, 2016
Respectfully submitted,
/s/Patricia L. Sindel--------------------------------------------------
Patricia L. Sindel, (D.C. Bar #997505),
Trial Attorney, Networks & Technology Enforcement Section, U.S.
Department of Justice, Antitrust Division, 450 Fifth Street NW.,
Suite 7100, Washington, DC 20530, Telephone: (202) 598-8300,
Facsimile: (202) 616-8544, Email: [email protected].
KAPLAN KIRSCH ROCKWELL
April 20, 2016
James J. Tierney, Chief
Networks & Technology Enforcement Section
United States Department of Justice
Antitrust Division
450 Fifth Street NW., Suite 7100
Washington, DC 20530
Re: BBA Aviation, PLC and Landmark U.S. Corp LLC
Case No. 1:16-cv-00174
Dear Mr. Tierney:
As counsel to the City of Dallas (``City''), Kaplan Kirsch &
Rockwell LLP (``Firm'') submits these comments in the matter of
United States v. BBA Aviation, et al., case no. 1:16-cv-00174,
concerning the merger of BBA Aviation (parent corporation to
Signature Flight Support Corporation (``Signature'')), and Landmark
U.S. Corp LLC (``Landmark''). The Firm and the City recognize that
the deadline for comments on this matter has passed, but
respectfully request that the Department of Justice accept these
comments despite their tardiness.\1\
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\1\ See81 Fed. Reg. 7144 (Feb. 10, 2016) (setting 60-day comment
period).
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The City owns and operates Dallas Love Field Airport (``Love
Field''). The City is concerned about the possible anticompetitive
effects of the merger between Landmark and Signature at Love Field,
where both Landmark and Signature currently operate.
Presently, there are six (6) fixed base operator (``FBO'')
locations at Love Field, operated by five different FBO entities.
Landmark operates one (1) of the FBO locations, and Signature
operates two (2) of the locations.\2\ In 2015, Signature's two (2)
locations combined sold 40 percent of the total aviation fuel \3\ at
Love Field (by FBOs), and Landmark's single location sold 14 percent
of the total aviation fuel. This, after the proposed merger, would
result in 54 percent of the fuel at Love Field being provided by the
``new'' Signature.
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\2\ Signature operates both Signature Flight Support (also known
as Signature North) and Dalfort Fueling.
\3\ 100LL and Jet-A.
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The remaining three (3) FBOs sold 46 percent of the fuel, with
two smaller locations selling approximately 9 percent each, and one
larger entity selling 28 percent. In addition to conducting a
majority of the fuel sales, Landmark and Signature together lease
nearly 70 percent of the total hangar, general aviation terminal
facilities, and office space at Love Field. A chart with a breakdown
of the data used to calculate these percentages is enclosed with
this letter as Attachment A.
Under the Department of Justice and Federal Trade Commission's
Horizontal Merger Guidelines, markets with an initial score over
2500 on the Herfindahl-Hirschman Index (``HHI'') are considered
``highly concentrated.'' \4\ When a prospective merger in a highly
concentrated market would result in an HHI increase of 200 or more,
the transaction ``will be presumed to be likely to enhance market
power.'' \5\ Such increases in HHI are considered indicators of
transactions ``for which it is particularly important to examine
whether other competitive factors confirm, reinforce, or counteract
the potentially harmful effects of increased concentration.'' \6\
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\4\ Horizontal Merger Guidelines Sec. 5.3.
\5\ Id.
\6\ Id.
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At Love Field, the fuel flowage data suggests that the existing
market is already highly concentrated, and that a merger of
Signature and Landmark would increase the HHI by well over 200
points.\7\ Despite this potential effect, there are no indications
that the Department of Justice examined any of the competitive
effects of the merger at Love Field. In fact, it appears that the
Department of Justice failed to consider the impact on Love Field
whatsoever, or, alternatively, failed to adequately explain why it
chose to ignore those impacts.
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\7\ The City recognizes that HHI is typically calculated using
revenue data, but such information is proprietary and unavailable to
the City.
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These facts and the Department's own guidelines demonstrate the
need to carefully scrutinize the merger's potential effects at Love
Field. Yet, the materials published by the Department of Justice in
the Federal Register and filed with the United States District Court
for the District of Columbia make no reference to operations at Love
Field.
[[Page 36349]]
The proposed consent decree requires Signature and Landmark to
divest their assets from six airports where both currently operate,
but there is not even an acknowledgement that both firms operate
FBOs at Love Field.\8\ While the City does not necessarily advocate
for a divestiture of Signature or Landmark's assets at Love Field,
the lack of discussion or findings on the issue is troubling,
especially when such an absence is inconsistent with the
Department's own guidance on this issue.
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\8\ The City also notes that there is no discussion of San
Antonio International Airport or Teterboro Airport, the two other
U.S. airports where both Signature and Landmark presently operate.
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The proposed consent decree not only imposes no constraints on
Signature-Landmark operations at Love Field, but would effectively
allow Signature-Landmark to acquire another FBO at Love Field. The
proposal allows such an acquisition at ``an airport where [the
merged entity] is already providing FBO Services in the United
States unless (1) the assumption or acquisition is valued at less
than $20 million dollars, or (2) at least two Full-Service FBOs not
involved in the transaction provide FBO Services at the airport
where the assumption or acquisition will take place.'' \9\ This
provision will be insufficient to protect the competitive
environment at Love Field \10\ because BBA could acquire the
remaining FBOs without Department of Justice scrutiny or permission.
The new Signature-Landmark entity could acquire the next-largest FBO
at Love Field because of the exception allowing such acquisition
when there are two other FBOs at the airport, and could then acquire
the other entities if they are valued below $20 million.\11\ By
failing to address this potential issue now, the Department of
Justice leaves open the possibility that BBA could later acquire an
exclusive right at Love Field.
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\9\ 81 FR at 7155 (emphasis added).
\10\ The City is also concerned that even greater concentration
of FBO business at Love Field may result in violations of the
Federal Aviation Administration Grant Assurances, which specifically
prohibit the granting of ``exclusive rights'' to aeronautical
service providers. See FAA Order 5.190.6B, ]8.1. The City has an
affirmative obligation to ensure that an exclusive right is not
created at Love Field.
\11\ The City presently has no information about the value of
any of the other FBOs at Love Field, but all are small entities that
operate only at Love Field.
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The City urges the Department of Justice to include more
specific protections for Love Field and other airports that are not
proposed for divestiture, but where the market power of the merged
entity could pose a serious threat of further market concentration.
Specifically, the City suggests including provisions that would
serve to prevent the future purchase of FBOs at any airport where
Signature and Landmark both operated prior to the merger, regardless
of the value of the transaction or presence of additional FBOs. As
explained above, the current provision in the proposed consent
decree is too narrow to adequately protect Love Field. A broader
provision would better protect Love Field and other airports from
potential anticompetitive environments.
Thank you for your time and consideration in this matter. If you
have any questions about any of the comments in this letter, please
do not hesitate to contact me.
Sincerely,
/s/--------------------------------------------------------------------
Peter J. Kirsch by Nicholas M. Clabbers,
On behalf of: City of Dallas, Department of Aviation, 8008 Herb
Kelleher Way, LB16, Dallas, Texas 75235.
Attachment A
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FBO fuel sales at Dallas Love Field (2015 totals)
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FBO 100 LL (gals) Jet A (gals) Total
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Signature Flight Support........................................ 9,992 4,126,136 4,136,128
Signature Dalfort............................................... 8,335 3,935,851 3,944,186
Landmark Aviation............................................... 37,380 2,881,685 2,919,065
Total Signature + Landmark...................................... 55,707 10,943,672 10,999,379
All Other FBOs.................................................. 101,600 9,238,107 9,339,707
S+L Market Share Post-Merger \1\................................ 35.4% 54.2% 54%
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FBO Facility Leaseholds at Dallas Love Field (as of 2015)
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Terminal and offices
FBO Hangars (sqft) (sqft) Total
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Signature Flight Support............... 220,500.................... 97,688.................... 318,188
Signature Dalfort...................... 400,703.................... 14,212.................... 414,915
Landmark Aviation...................... 106,890.................... 79,848.................... 186,738
Total Signature + Landmark............. 728,093.................... 191,748................... 919,841
All Other FBOs \2\..................... N/A........................ N/A....................... 432,108
S + L Percentages Post-Merger.......... Unknown.................... Unknown................... 68%
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\1\ The calculations of approximate market share are based solely on the fuel quantities sold, as the City does
not have access to proprietary revenue data.
\2\ The data available for the other FBOs does not delineate between hangar and office space.
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[FR Doc. 2016-13185 Filed 6-3-16; 8:45 am]
BILLING CODE 4410-11-P